Tuesday, June 2, 2009

The Governator Develops Davisemia

In 2003, when California governor Gray Davis was ousted in the now-infamous recall, the chief argument for his ouster was his inability to manage energy pricing and availability which led to massive state budget deficits. Arnold Schwarzenegger, campaigning on a vague anti-tax platform, won the largest share of the votes for Davis' replacement.

The initial drive for the recall was the horrendous California state budget forecast Davis published in 2002, following years of energy fluctuations nearly bankrupting the state.
On December 18, 2002, just over a month after being reelected, Davis announced that California would face a record budget deficit possibly as high as $35 billion, a forecast $13.7 billion higher than one a month earlier. The number was finally estimated to be $38.2 billion, more than all 49 other states' deficits combined. Already suffering from low approval ratings, Davis's numbers hit historic lows in April 2003 with 24% approval and 65% disapproval according to the California Field Poll. Davis was almost universally disliked by both Republicans and Democrats in the state and a recall push was high. - Wikipedia

We now know that much of the energy crisis of 2000-02 that afflicted California was the direct result of Enron and other providers abusing the quasi-deregulated energy market in California, and that Davis was their sucker in Sacramento. That knowledge, however, came too late to offset the appearance of mismanagement, and following an ugly campaign in 2002 it made Davis an all-too-vulnerable target for the anti-tax GOP machinery.

Six years later, Davis' replacement is learning the hard way that budget numbers like Davis' aren't necessarily the consequence of poor management:
In a special election on May 19, voters rejected a batch of measures on increasing taxes, borrowing funds and reapportioning state money that were designed to close a multibillion-dollar budget gap. The cuts Mr. Schwarzenegger has proposed to make up the difference, if enacted by the Legislature, would turn California into a place that in some ways would be unrecognizable in modern America: poor children would have no health insurance, prisoners would be released by the thousands and state parks would be closed.


Mr. Schwarzenegger, a Republican, is threatening to eliminate the Healthy Family Program, the state’s health insurance program that covers over 900,000 children and is financed with state and federal money, as well as the state’s main welfare program, known as Cal-Works, which provides temporary financial assistance to poor families and a caregiver for the severely disabled.

The $1 billion in cuts to programs for the poor would be met with $680 million in new cuts to education and a 5 percent salary reduction for state employees, many of whom are already enduring furloughs.

These proposals, as well as those that would make cuts to state parks, the prison system and other state agencies, are winding their way through Sacramento now, where they will be voted on by committees and eventually the full Legislature.

Some of the proposed cuts are clearly saber rattling on the governor’s part, but there is a nervous acceptance among lawmakers, advocates for the poor and outside budget experts that the state is out of money and time.


The Democratic-controlled Legislature has been uncharacteristically silent on most of the cuts, most likely because lawmakers know that tax increases are not politically palatable, that huge cuts in some form are in the offing no matter what, and that any program they wish to spare will quite likely have advocates among their ranks.

California recovered from the energy market shenanigans and the dot-bomb only to be hit by the financial crisis and skyrocketing foreclosure rates. The situation has become bad enough that voters there are revisiting Proposition 13, the provision passed three decades ago that locks property tax rates in at purchase and prohibits increases.

So less than six years after ascending over the corpse of Davis's career, Schwarzenegger is facing the same dire budget figures that tipped the scales against his predecessor.

No comments:

Post a Comment